About | HeinOnline Law Journal Library | HeinOnline Law Journal Library | HeinOnline

7 J. Comp. L. & Econ. 133 (2011)
The Antitrust Consumer Welfare Paradox

handle is hein.journals/jrcolaec7 and id is 135 raw text is: Journal of Competition Law & Economics, 7(1), 133-164
doi: 10.1 093/joclec/nhq0 19
Advance Access publication 1 December 2010
Barak Y Orbach *
Consumer welfare is the only articulated goal of antitrust law in the United
States. It became the governing standard following the 1978 publication of
Robert Bork's The Antitrust Paradox. The consumer welfare standard has been
instrumental to the implementation and enforcement of antitrust laws. Courts
believe they understand this standard, although they do not bother to analyze
it. Scholars hold various views about the desirable interpretations of the stan-
dard and they selectively use random judicial statements to substantiate oppo-
site views. This article introduces the antitrust consumer welfare paradox: it
shows that, under all present interpretations of the term consumer welfare,
there are several sets of circumstances in which the application of antitrust laws
may hurt consumers and reduce total social welfare. This article shows that,
when Bork used the term consumer welfare, he obscured basic concepts in
economics. This article clarifies that the antitrust methodology permits only
surplus analysis and does not accommodate welfare analysis. It explains the
conceptual differences between the terms surplus and welfare and the rel-
evant implications. This article further explains the differences between two
other competing standards-consumer surplus and total surplus-that
presently serve as proposed interpretations for the term consumer welfare.
Each interpretation has some limitations and the necessary analytical progress
calls first for conceptual clarity. This article argues that whatever good ends the
consumer welfare phrase may have once served, antitrust law should now lay
it to rest.
J7EL: D60; K21; _AO; L51
All antitrust lawyers and economists know that the stated instrumental goal
of antitrust laws is consumer welfare, which is a defined term in
* Associate Professor of Law, the University of Arizona. E-mail: barak@orbach.org. This article
benefited from comments and criticism from Jean Braucher, Grace Campbell, Steven
Edwards, Harry First, Josh Gray, Herbert Hovenkamp, Louis Kaplow, John Lopatka, Frances
Sjoberg, Carol Rose, Simone Sepe, Danny Sokol, David Tadmor, and the participants at the
2010 Next Generation of Antitrust Scholarship Conference. All errors, mistakes, and
inaccuracies are mine.

© The Author (2010). Published by Oxford University Press. All rights reserved.
For Permissions, please email: journals.permissions@oup.com

What Is HeinOnline?

HeinOnline is a subscription-based resource containing nearly 3,000 academic and legal journals from inception; complete coverage of government documents such as U.S. Statutes at Large, U.S. Code, Federal Register, Code of Federal Regulations, U.S. Reports, and much more. Documents are image-based, fully searchable PDFs with the authority of print combined with the accessibility of a user-friendly and powerful database. For more information, request a quote or trial for your organization below.

Short-term subscription options include 24 hours, 48 hours, or 1 week to HeinOnline with pricing starting as low as $29.95

Contact us for annual subscription options:

Already a HeinOnline Subscriber?

profiles profiles most